Stocks And Precious Metals Charts - Risk Off - Non-Farm Payrolls Next Week

Stocks took a major hit last night, and gold soared, in a flight to safety reaction after it was announced that the US had assassinated one of Iran's military and political leaders.

The Exchange Stabilization Fund managed to walk the futures back up a bit, and Wall Street closed ranks to help stocks regain some of this lost ground.

Gold, however, did not give up much ground and is bumping its head against the key overhead resistance of 1550 on the chart. If 1550 is taken out, we may see some significant moves sooner rather than later.

Silver did not really participate because it is not a 'safe haven' play in the same manner as gold. It is a companion to gold for the most part, but not the same, and not motivated by all the same things.

The mental gyrations of the spokesmodels on financial television today, in dismissing the drop in stocks as the over-reaction of junior traders while the adults were still on holiday, was almost funny. It seemed like desperation.

So let's see where this goes.

It may turn out all right and perhaps result in something positive. But I am not hopeful at all. And it is a major mistake to just dismiss this widening of exogenous risks as a 'blip on the screen.' The hucksters and carnival barkers of the financiers may say this, but they do not believe it one bit. And neither should you.

Stocks are richly valued here, and the financial system is much more fragile than the powers that be will admit.

Other than continuing to pour more liquidity to the Banks, and allowing them to execute their virtually unregulated schemes behind the scenes, I don't think that there is a viable 'plan B' should things get nasty.

And my comfort level with the current administration in handling complex strategic issues with forethought and seriousness is almost nil.

In other words, do not count on your idols to protect you. They may protect their friends, but you are not one of them.

Have a pleasant weekend.

(Click on image to enlarge)